Headquartered in Chicago, Illinois, Boeing is the second-largest defense contractor in the world.^[1] In 2005, the company was the world’s largest civil aircraft manufacturer in terms of value (with 49% of orders and 45% of deliveries), overtaking Airbus for the first time since 2000. The largest exporter in the United States, Boeing’s stock is a component of the Dow Jones Industrial Average.

History

Before 1950s

The company was founded in Seattle, Washington by William E. Boeing on July 15, 1916, together with George Conrad Westervelt, a U.S. Navy engineer, and was named “B&W” after their initials. Soon the name was changed to “Pacific Aero Products” and, in 1917, the company became the “Boeing Airplane Company.” William E. Boeing had studied at Yale University and worked initially in the timber industry, where he became a rich man. There he also acquired knowledge about wooden structures which was later revealed to be of value for the design and assembly of airplanes.

In 1927, Boeing created an airline, named Boeing Air Transport (BAT). A year later, BAT, as well as Pacific Air Transport and Boeing Airplane Company merged into a single corporation. The company changed its name to United Aircraft And Transport Corporation in 1929 and acquired Pratt & Whitney, Hamilton Standard Propeller Company, and Chance Vought. United Aircraft then purchased National Air Transport in 1930. The Air Mail Act of 1934 prohibited airlines and manufacturers from being under the same corporate umbrella, so the company split into three smaller companies - Boeing Airplane Company, United Airlines, and United Aircraft Corporation, the precursor to United Technologies. As a result, William Boeing sold off his shares.

Shortly after, an agreement with Pan American World Airways (Pan Am) was reached, to develop and build a commercial flying-boat able to carry passengers on transoceanic routes. The first flight of the Boeing 314 Clipper was in June 1938. It was the largest civil aircraft of its time, with a capacity of 90 passengers on day flights, and of 40 passengers on night flights. One year later, the first regular passenger service from the US to the UK was inaugurated. Subsequently other routes were opened, so that soon Pan Am flew with the Boeing 314 to destinations all over the world.

In 1938, Boeing completed work on the Model 307 Stratoliner. This was the world’s first pressurized-cabin transport aircraft, and it was capable of cruising at an altitude of 20,000 feet. — above most weather disturbances.

During World War II, Boeing built a huge number of bombers. Many of the workers were women whose spouses had gone to war. In the beginning of March 1944, production had been scaled up in such a manner that over 350 planes were built each month. To prevent an attack from the air, the manufacturing plants had been covered with greenery and farmland items. During these years of war the leading aircraft companies of the US cooperated. The Boeing-designed B-17 bomber was assembled also by Lockheed Aircraft Corp. and Douglas Aircraft Co., while the B-29 was assembled also by Bell Aircraft Co. and by Glenn L. Martin Company.

After the war, most orders of bombers were canceled and 70,000 people lost their jobs at Boeing. The company aimed to recover quickly by selling its Stratocruiser, a luxurious four-engine commercial airliner developed from the B-29. However, sales of this model were not as expected and Boeing had to seek other opportunities to overcome the situation. The company successfully sold military aircraft adapted for troop transportation and for aerial refueling.

Industrial espionage

In June 2003 Lockheed Martin sued Boeing alleging the company had resorted to industrial espionage in 1998 to win the Evolved Expendable Launch Vehicle (EELV) competition. Lockheed alleged that former employee Kenneth Branch, who went to work for McDonnell Douglas and Boeing, passed 25,000 proprietary documents to his new employers. Lockheed argued that these documents allowed Boeing to win 21 of the 28 tendered military satellite launches.

In July 2003 Boeing was penalized, with the Pentagon stripping $1 billion worth of contracts away from the company and awarding them to Lockheed. Furthermore, the company was forbidden to bid for rocket contracts for a twenty-month period which expired in March 2005.

In early September 2005 it was reported that Boeing was negotiating a settlement with the U.S. Department of Justice in which it would pay up to $500 million to cover this and the Darleen Druyun scandal. [2]

Airbus subsidy dispute

In October 2004, Boeing filed a complaint at the World Trade Organization, claiming that Airbus had violated a 1992 bilateral accord when it received what Boeing deems as “unfair” subsidies from several European governments. Airbus retaliated by filing another complaint, contesting that Boeing had also violated the accord when it received tax breaks from the U.S. Government. Moreover, the E.U. also complained that the investment subsidies from Japanese airlines violated the accord.

On January 11, 2005 the two parties (Boeing and Airbus) agreed that they would attempt to find a solution to the dispute outside of the WTO.

However, in June 2005, Boeing and the United States government reopened the trade dispute with the WTO, claiming that Airbus had received illegal subsidies from European governments. Airbus has also retaliated against Boeing, reopening the dispute and also accusing Boeing of receiving subsidies from the US government.